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Tighter DOD purse sends Northrop's 2Q numbers into decline

Northrop Grumman Corp.’s earnings totaled $520 million in the second quarter of 2011, a decline of $220 million from the $740 million reported in the second quarter of 2010, according to the company's financial report released July 27.

The giant defense contractor’s sales totaled $6.56 billion compared to $7.26 billion in sales during the same period in 2010.

In 2011, Northrop Grumman had $5.1 billion in new business awards for the second quarter, and total backlog was $41.8 billion as of June 30, the company reported.

The company pinned the decreases on the Defense Department’s buying. It said the results reflect the effects of lower DOD investment outlays, including the announced force reductions in overseas contingency operations. The company also pointed to its reduced participation in the Nevada National Security Site joint venture and delayed awards for manned aircraft programs.

In its Information Systems division, sales in the second quarter declined 4 percent compared to the same quarter in 2010. Northrop Grumman had $2.03 billion in sales this year, and $2.12 billion in the same quarter of 2010. For the first half of 2011, sales reached $4.06 billion, which is down 3 percent compared to 2010.

DOD bought less for its defense systems programs, causing the decrease in the division, the company said.

It was also affected by the reductions in force in contingency operations. The government bought less land and self-protection systems indefinite-delivery, indefinite-quantity contracts, such as Large Aircraft Infrared Countermeasures and Vehicular Intercommunication Systems. The company also had lower volume of sales for land and self-protection systems and targeting systems programs.

Northrop Grumman Corp., of Los Angeles and Falls Church, Va., ranks No. 2 on Washington Technology’s 2011 Top 100 list of the largest federal government contractors.

About the Author

Matthew Weigelt is a freelance journalist who writes about acquisition and procurement.

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